The Ultimate Exchange Rate & Currency Converter Glossary
Exchange rates can look simple until you try to compare a bank quote, a card charge abroad, and an online converter that all show different numbers. This glossary explains the language behind exchange rates and currency converters in plain English, without pretending every visitor wants a finance degree.
Use it to understand what a converter is really showing you, what "mid-market" means, why your provider may offer a worse rate, and which terms matter when you are actually sending money, travelling, or comparing offers.
How to read a currency converter in 30 seconds
- Check the pair. In EUR/USD, the first currency is the one being priced, and the second is the one you are getting in return.
- Check the rate type. A mid-market or indicative rate is a benchmark. It is not always the rate your bank, card, or transfer provider will give you.
- Check the timestamp. Rates move. A good converter should tell you when the number was last updated and whether the market is open or closed.
- Check the total outcome. When comparing providers, the important number is usually the final amount received after fees and markups, not the headline fee alone.
Core exchange-rate terms
Exchange rate
An exchange rate is the price of one currency in terms of another. If GBP/USD is 1.27, one British pound buys 1.27 US dollars.
Currency pair
A currency pair is the two-currency combination used to quote an exchange rate, such as USD/MXN or EUR/JPY. Pairs are always read in order, because reversing the order changes the meaning.
Base currency
The base currency is the first currency in a pair. In USD/MXN, the US dollar is the base currency, so the rate tells you how many Mexican pesos one US dollar buys.
Quote currency
The quote currency is the second currency in a pair. In USD/MXN, the Mexican peso is the quote currency, because it is the currency being quoted against one US dollar.
Mid-market rate
The mid-market rate is the midpoint between the wholesale buy and sell prices in the FX market. It is a useful benchmark because it strips out the markup that banks, cards, and transfer providers usually add.
Indicative rate
An indicative rate is a reference rate shown for information or comparison. It helps you understand the market, but it is not a binding promise that you can exchange at that exact number.
Executable rate
An executable rate is a rate a provider is actually willing to trade at, subject to its own terms, timing, fees, and limits. This is the number that matters when real money is moving.
Reference rate
A reference rate is a published benchmark used for comparison, reporting, or valuation. It is useful for context, but not necessarily tradable for ordinary customers.
Official rate
An official rate is a rate set, published, or recognised by a central bank or public authority. In some countries it is close to market pricing; in others it can differ sharply from what consumers or businesses actually receive.
Spot rate
The spot rate is the current market price for a currency transaction that settles promptly, usually within two business days. In everyday use, this is often what people mean when they say "the exchange rate".
Forward rate
A forward rate is an exchange rate agreed today for a transaction that will settle on a future date. It is commonly used by businesses and institutions that want more certainty about future currency costs.
Cross-rate
A cross-rate is an exchange rate calculated between two currencies using a third currency, often USD or EUR, as a bridge. This is common when there is no deep direct market for the pair you are looking at.
Direct rate
A direct rate is one quoted directly for the pair itself rather than derived through another currency. Direct rates are usually more common for heavily traded pairs.
Derived rate
A derived rate is calculated from other available rates rather than quoted directly in the market. Derived rates can still be useful, but they should be labelled clearly so users know how the number was produced.
Inverse rate
The inverse rate is the pair turned around. If EUR/USD is 1.08, then USD/EUR is roughly 0.9259 before rounding. Because converters round numbers, the inverse shown on screen may not look perfectly exact.
Pricing and comparison terms
Bid price
The bid price is the price at which a market maker or dealer is willing to buy the base currency. In a normal quote, the bid is the lower of the two prices.
Ask price
The ask price, also called the offer price, is the price at which a market maker or dealer is willing to sell the base currency. The ask is normally higher than the bid.
Spread
The spread is the difference between the bid and ask price. In practical terms, a wider spread usually means a more expensive transaction, especially when the provider claims to have "no fee" but hides the cost in the rate.
Markup
A markup is the difference between the benchmark market rate and the rate a provider actually offers you. This is one of the most common hidden costs in foreign exchange.
Fee
A fee is a separate charge added to a conversion or transfer. Some providers charge a visible fee and also use a marked-up rate, which is why looking at the fee alone can be misleading.
Fixed fee
A fixed fee is a flat charge that does not change with the amount sent or converted. It matters most on smaller transfers, where it can quietly become a large percentage of the total.
Percentage fee
A percentage fee rises with the amount being converted or transferred. It can look small in percentage terms but become expensive on larger payments.
Total cost
Total cost is the full economic cost of a currency conversion once both the fee and the exchange-rate markup are included. This is a better comparison tool than checking only the advertised fee.
Amount received
Amount received is the amount that actually lands with the recipient after the rate and all fees are applied. For most users, this is the clearest way to compare two providers.
Rate lock
A rate lock means a provider agrees to hold a quoted rate for a certain period or until a payment step is completed. This can reduce uncertainty, but the terms matter, especially if funding or settlement is delayed.
Live rate
A live rate is a rate updating during market hours with relatively little delay. "Live" does not always mean tick-by-tick, so a trustworthy site should still show a timestamp.
Delayed rate
A delayed rate is a rate that reflects the market with a lag. For many ordinary uses this is fine, but it matters less when a user assumes a delayed quote is an executable real-time offer.
Payment, transfer, and card terms
Bank rate
A bank rate is the exchange rate your bank offers for a transfer, card conversion, or foreign-currency purchase. It is often worse than the mid-market rate because the bank usually adds a spread and may also add fees.
Card rate
A card rate is the rate applied when a debit or credit card transaction is converted from one currency to another. The final number can depend on the card network, the issuing bank, the time the transaction settles, and any foreign-transaction fees.
Card network rate
A card network rate is the benchmark conversion rate used by a card network such as Visa or Mastercard before your bank adds its own charges or markup. It can be useful for comparison, but it is not always the only cost you pay.
Cash rate
A cash rate is the rate offered for physical notes and coins rather than electronic transfer. Cash rates are often worse than transfer or card rates because handling physical currency is more expensive.
Dynamic currency conversion (DCC)
Dynamic currency conversion happens when a merchant or ATM offers to charge you in your home currency instead of the local one. It feels convenient, but it often comes with a poor exchange rate and extra hidden margin.
Remittance
A remittance is money sent by a person in one country to someone in another. Remittance pricing often depends on the route, funding method, payout method, and local competition.
Funding method
The funding method is how the sender pays for the transfer or conversion, such as bank transfer, debit card, credit card, or cash. The funding method can materially change both the fee and the exchange rate offered.
Payout method
The payout method is how the recipient gets the money, such as bank deposit, mobile wallet, cash pickup, or home delivery. Different payout methods often come with different prices and delivery times.
Settlement
Settlement is the point at which the currency transaction is completed and the funds are actually exchanged. The rate shown when you start a transaction is not always the same as the rate applied when it settles.
Same-day settlement
Same-day settlement means the currency transaction completes on the same business day. This can matter for urgent business payments or market-sensitive transfers.
Cut-off time
A cut-off time is the latest time a provider accepts a payment or instruction for processing that day. Miss the cut-off and your transfer may roll into the next business day, sometimes affecting the rate or delivery time.
Weekend markup
A weekend markup is an extra margin some providers apply when the main FX market is closed. It is one reason a weekend card or transfer quote may look worse than a weekday benchmark rate.
Market structure and trading terms
Forex (FX)
Forex, or FX, is short for foreign exchange. It refers to the global market in which currencies are priced, traded, and exchanged.
Interbank market
The interbank market is the wholesale market where banks and large financial institutions trade currencies with one another. Consumer benchmark rates are generally linked to pricing formed in this market, even if retail users cannot access it directly.
Liquidity
Liquidity describes how easily a currency or pair can be traded without causing a large price move. High-liquidity pairs usually have tighter spreads and more stable pricing.
Volatility
Volatility measures how much a currency pair tends to move over time. High volatility means larger or faster swings, which can make budgeting, pricing, or timing a transfer harder.
Pip
A pip is a standard small unit of price movement in FX. For most pairs it is the fourth decimal place, while for many JPY pairs it is the second decimal place.
Pipette
A pipette is one-tenth of a pip. Some trading platforms and data feeds quote prices to pipette precision for more granular pricing.
Major pair
A major pair is a heavily traded pair that includes the US dollar and another widely traded currency, such as EUR/USD or USD/JPY. Major pairs tend to have better liquidity and tighter spreads.
Minor pair
A minor pair is a pair that does not include the US dollar but still involves widely traded currencies, such as EUR/GBP. Minors can be liquid, but not always as deep as the biggest dollar pairs.
Exotic pair
An exotic pair combines a major currency with a less-traded one, or two less-traded currencies together. Exotic pairs often have wider spreads, less liquidity, and larger gaps between benchmark and retail pricing.
Slippage
Slippage is the difference between the rate you expected and the rate you actually received when the trade or transfer is executed. It is more common in volatile markets or when liquidity is thin.
Market open
When the market is open, benchmark FX rates are updating as trading continues. When it is closed, many sites show the last available rate, while providers may still quote prices with added margin.
Safe-haven currency
A safe-haven currency is one that investors often buy during periods of market stress or uncertainty. The Swiss franc and Japanese yen are the classic examples, although no "safe haven" is perfectly safe in every situation.
Central bank and macro terms
Floating exchange rate
A floating exchange rate is one mainly determined by supply and demand in the market. Many major currencies float, even if central banks still influence conditions through interest rates and communication.
Managed float
A managed float is a system where a currency trades in the market but the central bank steps in from time to time to influence the result. This can include intervention, guidance, or formal trading bands.
Currency peg
A currency peg is a policy that ties one currency's value to another currency, or to a basket of currencies. Pegs can reduce day-to-day volatility, but they require active management and can come under pressure.
Appreciation
Appreciation means a currency has become more valuable relative to another. If EUR/USD rises, the euro has appreciated against the US dollar.
Depreciation
Depreciation means a currency has become less valuable relative to another. If GBP/USD falls, the pound has depreciated against the US dollar.
Devaluation
Devaluation is a deliberate downward adjustment in the value of a currency by a government or central bank in a managed or fixed-rate system. It is different from normal market-driven depreciation.
Revaluation
Revaluation is a deliberate upward adjustment in the official value of a currency. It is the opposite of devaluation and usually happens under a fixed or tightly managed system.
Central bank intervention
Central bank intervention is when a central bank buys or sells currency, or signals that it may do so, to influence the exchange rate. Intervention can be direct, verbal, or part of a wider policy package.
Interest rate differential
The interest rate differential is the gap between prevailing interest rates in two currencies. It matters because higher-yielding currencies can attract capital, while lower-yielding currencies can be used as funding currencies.
Inflation
Inflation is the rate at which prices for goods and services rise over time. Persistent inflation can affect exchange rates because it influences central bank policy, real returns, and confidence in a currency.
Reserve currency
A reserve currency is a currency widely held by central banks and institutions as part of their official reserves. Reserve currencies matter because they tend to play an outsized role in trade, finance, and global liquidity.
Capital controls
Capital controls are restrictions on the movement of money into or out of a country. They can affect which exchange rates are available in practice and whether official rates match real-world pricing.
FX reserves
FX reserves are foreign currencies and reserve assets held by a central bank. They can be used to support the local currency, manage imports, or defend an exchange-rate regime.
Carry trade
A carry trade is a strategy that borrows in a lower-yielding currency and invests in a higher-yielding one. It can work well when markets are calm, but it can unwind painfully when volatility rises.
Hedging
Hedging means taking steps to reduce exchange-rate risk rather than to speculate on direction. Businesses often hedge future receipts or payments so a sudden move in the market does not wreck their budget.
Currency code and formatting terms
ISO 4217 currency code
An ISO 4217 code is the standard three-letter code used to identify a currency, such as USD, EUR, or GBP. These codes reduce ambiguity, especially where a symbol like "$" could mean several different currencies.
Currency symbol
A currency symbol is the sign commonly used to represent a currency, such as $, €, £, or ¥. Symbols are convenient, but they are not always unique, which is why codes matter.
Minor unit
A minor unit is the subdivision of a currency, such as cents in a dollar or pence in a pound. Not every currency has two decimal places, and some have no active minor unit in everyday use.
Decimal places
Decimal places are the digits shown after the main unit in a quoted rate or amount. Converters often round what they display, which is one reason hand calculations do not always match the screen perfectly.
Business day
A business day is a day on which banks and payment systems are open for normal processing. Settlement times, cut-offs, and value dates are usually based on business days rather than calendar days.
Banking holiday
A banking holiday is a day when banks or payment systems are closed in one or more relevant countries. Banking holidays can delay settlement and create timing differences between the rate displayed and the rate applied.
Value date
The value date is the date on which the exchanged funds are deemed to be delivered and available. This matters for businesses, treasury teams, and anyone comparing same-day versus future settlement options.
Conversion
A conversion is the act of exchanging one currency for another. Some conversions happen inside a bank account or card transaction without the user ever seeing the rate mechanics clearly.
Transfer
A transfer is the movement of money from one person or account to another. A transfer can involve a currency conversion, but it does not have to.
Common questions about exchange rates and currency converters
Can I actually get the rate shown online?
Sometimes, but not always. Many sites show an indicative benchmark, often the mid-market rate, while banks, cards, cash exchanges, and transfer services add their own spread, fee, or both. The safest comparison is the final amount you would receive after all costs.
Why is my bank rate different from the rate on a converter?
Because the converter may be showing a benchmark rate while your bank is showing a retail rate. Banks often include a hidden markup in the rate itself, and they may also charge a separate transfer or card fee.
Why do rates stop moving on weekends?
The main wholesale FX market is largely closed over most of the weekend. Many converters therefore show the last available market rate until trading reopens, while some providers still quote weekend prices with extra margin.
Why do two exchange-rate sites show slightly different numbers?
Small differences can come from timing, rounding, data sources, or whether one site is showing a direct rate and another is deriving a cross-rate. Bigger differences usually mean you are comparing a benchmark rate with a retail quote.
What should I compare: the fee or the rate?
Neither on its own. A provider can advertise a low fee but use a poor exchange rate, or show a strong rate but make up for it with extra charges. The most honest comparison is the final amount received.
Is the mid-market rate the same as the interbank rate?
People often use the terms loosely, but they are not always identical in a strict sense. In everyday consumer language, "mid-market" is the most useful benchmark term because it describes the rate before a provider adds its own markup.
What is a good rate today?
A "good" rate is usually one that is close to the benchmark rate once you include all fees. If a provider's total cost is low and the amount received is close to what the mid-market would suggest, that is usually a better sign than a low headline fee alone.
A note on rates shown on ExchangeRates.com
On most pages, ExchangeRates.com shows an indicative mid-market rate for information and comparison. It is a benchmark, not a guaranteed quote. Banks, cards, money-transfer services, cash bureaux, and other providers usually add their own spread, fee, or both.
If you want the deeper version, see our Methodology page for how rates are sourced and displayed, and our FAQ page for practical questions about trust, timing, and why retail rates differ.